When is interest applied by Revenue?

If you do not pay Value-Added Tax (VAT) on time, interest is charged on a daily basis from the date the payment is due until the amount outstanding is paid.

Where a VAT refund has been overclaimed, you will have to pay interest on the overclaimed amount from the date the overpayment was made to you.

The rate of interest is 0.0274% per day or part of a day.

Interest on underpayment in direct debit scheme

Where you pay your VAT liability by direct debit, interest is also charged on any balance of VAT which remains underpaid at the end of the accounting period agreed with Revenue.

This only arises where more than 20% of the actual liability for that accounting period remains underpaid. Interest is due in these circumstances from a date which is six months prior to the due date for filing your VAT return.

Interest on estimates and assessments

In a situation where Revenue estimates your VAT liability, interest on VAT unpaid is calculated at a daily rate from the date the VAT was payable.

Where Revenue issues an assessment, interest is payable at a daily rate from the date the original VAT return was due.

However, where the assessment includes VAT due in respect of more than one taxable period, interest is calculated from the last tax period included in that assessment.

This is the case even where an appeal is lodged against the assessment.